Recommendations Regarding the Mutual Exchange of
Cross-Held Shares

August 5, 1998

Keidanren
(Japan Federation of Economic Organizations)

As the business environment facing companies changes with the growing emphasis regarding returns on equity among corporate managements and the introduction of market value accounting practices, the dissolution of cross-shareholdings is steadily progressing. Worsening of the demand-supply balance due to the steady dissolution of cross-shareholdings has been one of the factors causing the prolonged slump in the stock market and continues to be a major barrier to reviving the Japanese economy.

To promote structural economic reforms, companies should be able to dissolve cross-shareholdings in a manner that does not negatively affect the market and to buy back their own shares in order to help stimulate stock market activity.

In light of such needs, we recommend that the following provisional measures be implemented with a limit of approximately three years, in order to institutionalize a system to facilitate カジノシークレット 出金 反映時間cquisition of own shares through the mutual exchange of crossholdings and establishment of special tax measures related to such exchanges.

Commercial-Code-Related Measures

  1. Special measures regarding methods of share repurchase
    When the board of directors of a publicly-traded company repurchases its own shares based on authorized articles of incorporation, カジノシークレット 出金 反映時間cquisition of shares mutually held for at least five years (including shares held through a subsidiary or other affiliated company) through an exchange should be approved on a provisional basis.
    The same type of acquisition should be approved even in cases when カジノシークレット 出金 反映時間rticles of incorporation have already been authorized.

  2. Acquisition price
    From the perspective of securing a fair transaction price, the price for acquisition by exchange should be based on market values.

  3. Treatment of カジノシークレット 出金 反映時間cquired shares
    Similar to the current system for normal share buybacks, shares that are repurchased through a mutual exchange must be cancelled immediately.

However, in the case of financial institutions, provisional measures may be necessary in order to maintain capital requirements.
Since the dissolution of crossholdings may result in a problem of establishing a quorum at shareholders meetings, this issue needs to be addressed separately.

Tax-Related Measures

Special measure on cancellation of shares acquired via mutual exchange
When companies acquire their own crossheld shares via a mutual exchange (including カジノシークレット 出金 反映時間cquisition of shares held through a subsidiary or other affiliated company), tax measures should be adopted so that カジノシークレット 出金 反映時間mount of the cancellation of shares up to the capital gains at the time of the exchange can be treated as an expense by the company.